After the completion of the Proposals, GOB will hold 99.99% of the equity interest in JJSB.

Transcription

1 GLOBAL ORIENTAL BERHAD ( GOB or COMPANY ) PROPOSED SUBSCRIPTION AND ACQUISITION 1. INTRODUCTION The Board of Directors of GOB ( Board ) wishes to announce that the Company had on 22 December 2017 entered into a share sale agreement ( SSA ) with Julung Jutawan Sdn Bhd s ( JJSB ) existing shareholders, namely Datuk Lim Chon Hoo, Shahrin bin Osman and Mohd. Khairuddin bin Hj. Nawawi, for the following: a. to subscribe for 199,900 new ordinary shares of JJSB ( JJSB Shares ) ( Subscription Shares ) representing 99.95% of the enlarged issued share capital of JJSB for a total cash consideration of RM199,900 ( Proposed Subscription ) and payment of RM50,010,514 to JJSB for the settlement of amount owing to existing shareholders of JJSB; and b. to acquire 51 and 29 ordinary shares of JJSB ( Sale Shares ) from Shahrin bin Osman and Mohd. Khairuddin bin Hj. Nawawi respectively ( Vendors ), for a total cash consideration of RM800,000 ( Proposed Acquisition ). (Collectively referred to as the Proposals ) After the completion of the Proposals, GOB will hold 99.99% of the equity interest in JJSB. The existing shareholder composition of JJSB is as follows:- No. of JJSB Shares (%) Shahrin bin Osman 51 51% Mohd Khairuddin bin Hj Nawawi 29 29% Datuk Lim Chon Hoo 20 20% Total % The shareholding of JJSB upon the completion of the Proposals is as follows: No. of JJSB Shares (%) GOB 199, % Datuk Lim Chon Hoo % Total 200, % Page 1 of 7

2 2. DETAILS OF THE PROPOSALS 2.1. Information on JJSB JJSB was incorporated in Malaysia as a private limited company on 19 April 2016 under the Companies Act, Its issued share capital is RM100 comprising 100 ordinary shares. The directors of JJSB are Shahrin bin Osman, Mohd Khairuddin Bin Hj Nawawi and Datuk Lim Chon Hoo. The principal business of JJSB is construction of residential and commercial properties and property development. For the financial period ended 15 December 2017, JJSB recorded an audited loss after taxation of RM30,817 while its audited net liabilities stood at RM37,956. JJSB has a sole investment in a 45% owned associated company, i.e. Jelita Orientasi Sdn Bhd ( JOSB ). JOSB was incorporated in Malaysia as a private limited company on 5 April 2016 under the Companies Act, Its issued share capital is RM500,000 comprising 500,000 ordinary shares. The directors of JOSB are Shahrin bin Osman, Mohd Khairuddin Bin Hj Nawawi, Datuk Lim Chon Hoo and Chan Koon Wa. JOSB is principally engaged in the business of construction of residential and commercial properties, property development and investment. It is the registered proprietor and beneficial owner of a piece of freehold land held under Pajakan Negeri No. Hakmilik PT112, HSD , Kawasan Bandar Kuala Lumpur, Daerah Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur whereby a residential development project is being developed since December 2016 ( Development Land ). Upon completion of the Proposals, JJSB and JOSB will become a 99.99% owned subsidiary company and 45% associated company of GOB respectively Salient Terms of the Proposals A) Subscription of JJSB Shares i. JJSB shall issue 199,900 new JJSB shares at the issue price of RM199,900 to GOB and GOB has agreed to subscribe for the Subscription Shares in accordance with the terms and conditions of the SSA and Articles of Association of JJSB. ii. iii. The subscription price shall be paid by GOB upon the signing of the SSA. The Subscription Shares to be issued shall be free from any and all mortgages, claims, encumbrances, charges, liens, priorities or options of any nature whatsoever and shall rank pari passu with all other JJSB Page 2 of 7

3 Shares whereas all other rights attached to the JJSB Shares shall be set out in the Articles of Association of JJSB. B) Purchase of Sale Shares i. Subject to the terms and conditions of the SSA, the Vendors as legal and beneficial owner of the Sale Shares shall sell and GOB relying on the warranties, representations and indemnity given by the Vendors shall purchase the Sale Shares free from all encumbrances, charges, liens (save as otherwise disclosed in the SSA) and with all rights, benefits and advantages now or hereafter attaching thereto, including, all bonuses, rights, from the date hereof, upon the terms and subject to the conditions contained in the SSA. ii. GOB shall pay to the Vendor the purchase consideration for the Sale Shares of RM800,000 in full on the Completion Date i.e. the date of the transfer and receipt of good and valid title of the Sale Shares. C) Settlement of amount owing to existing shareholders of JJSB GOB shall pay RM50,010,514 to JJSB, which is the amount owing to existing shareholders of JJSB. The payment shall be made in the following manner:- (i) the sum of RM49,990,508 only within seven (7) days after the date of the subscription, transfer and receipt of good and valid title of the Subscription Shares; and (ii) the sum of RM20,006 only on the date of the transfer and receipt of good and valid title of the Sale Shares Basis of consideration The subscription price of RM199,900 for the Subscription Shares and purchase consideration of RM800,000 for the Sale Shares were arrived at on a willing buyerwilling seller basis after taking into consideration the market response, development potential and carrying value of the Development Land as well as the evaluation undertaken by the Company on the value of the Development Land based on the management s assessment on the estimated gross development value ( GDV ) and gross development cost ( GDC ) of the project. The collective sum of both the subscription price and purchase consideration also takes into consideration the intention of GOB in achieving a share capital of RM200,000 in JJSB whilst retaining 99.99% equity interest in JJSB. The payment of RM RM50,010,514 to JJSB is on the basis of amount owing to the existing shareholders of JJSB. Page 3 of 7

4 2.4. Liabilities to be assumed by GOB There is no liability, including contingent liability and guarantee, to be assumed by GOB pursuant to the Proposals, except for GOB s commitment to pay a sum of RM50,010,514 to JJSB as detailed under section 2.2(C) above Source Of Funding The Proposals would be funded by internally generated funds of GOB Information on the Development Land JOSB is the registered proprietor and beneficial owner of the Development Land. A summary of the details of the Development Land is as follows: Title Particulars Approximate Area Tenure Category of land use Express Conditions Restrictions in interest Encumbrance Pajakan Negeri No. Hakmilik PT112, HSD , Kawasan Bandar Kuala Lumpur 1.65 acres Freehold Building Commercial Building Nil Charged to Ambank (M) Berhad The Development Land is situated along Jalan Changkat Raja Chulan and Jalan Bukit Ceylon, Kuala Lumpur and it is well connected via the existing primary roads within the city centre comprising Jalan Sultan Ismail, Jalan Ampang, and Jalan Bukit Bintang. The Development Land has been granted with development approvals from the relevant authorities, in particular, Advertising Permits and Developers' Licence were obtained in December The approved development which comprises 629 units of serviced apartments including a strata bungalow and retail shops with a combined estimated GDV of RM730 million, is expected to be completed by end of Development work has commenced and it is currently still at the early stage of development. Page 4 of 7

5 The carrying value of the Development Land and its related development expenditure as reported in the latest audited financial statements of JOSB for the financial year ended 31 December 2016 was RM195.9 million. Any future funding, if any, required of JOSB to finance the development costs of the Development Land is expected to be funded via the Company s internally-generated funds and/or bank borrowings, which shall be determined as and when such requirement arises. 3. RATIONALE AND PROSPECTS Upon completion of the Proposals, JJSB will become a 99.99%-owned subsidiary and JOSB will become an associated company of GOB respectively which would enable GOB to participate indirectly in the development potential of the Development Land which is strategically located within Kuala Lumpur s prime financial and commercial precinct known as Kuala Lumpur Golden Triangle. The residential development project on the land is expected to generate gross development value of approximately RM730 million over a development period of four (4) years. The Proposals are a strategic move by GOB to expand and complement its existing activities within the property development and construction where GOB mainly operates. 4. RISKS FACTORS The risk factors associated with the Proposals are as follows: Business risks Pursuant to the Proposals, the Company and its subsidiaries ( GOB Group or Group ) will be exposed to certain risks inherent in construction and property development industry, in which the Group is already presently exposed. These risks include but are not limited to changes in general economic conditions, changes in construction costs, availability of construction materials and labour, delay in construction delivery, changes in property market conditions, changes in demand and supply of residential properties, increased competition from residential projects in the vicinity and changes in credit and interest rate levels Non-completion risk There is a possibility that the Proposals may not be completed due to failure of the parties to complete the Proposals in accordance to the SSA. Page 5 of 7

6 Notwithstanding the above, the Board will take reasonable steps to ensure that the Proposals are completed within the stipulated timeframe and in accordance to the SSA. 5. FINANCIAL EFFECTS 5.1. Share Capital and Substantial Shareholders Shareholdings The Proposals will not have any effects on the issued share capital of the Company and the shareholdings of the substantial shareholders of the Company as no new ordinary shares in the Company will be issued pursuant thereto Net Assets & Gearing The Proposals is not expected to have any material effects on the net assets and gearing of the Group for the financial year ending ( FYE ) 31 March 2018 in view that the Proposals will be funded via internally generated funds Earnings The Proposals will not have any material impact on the earnings of the Group for the FYE 31 March Nevertheless, in the longer term, the Proposals are expected to contribute positively to the future earnings of the Group as and when the development project to be undertaken by JOSB is in progress and completed within the stipulated timeline. 6. APPROVALS REQUIRED The Proposals are not subject to approval from any other authority and is not subject to the approval of the shareholders of the Company. 7. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the directors and/or major shareholders of GOB and/or persons connected with them have any interest, direct or indirect, in the Proposals. 8. DIRECTORS RECOMMENDATION The Directors of GOB, having considered all aspects of the Proposals, are of the opinion that the Proposals are in the best interest of the Company. Page 6 of 7

7 9. OTHER MATTERS 9.1. Estimated timeframe for completion The Proposals are expected to be completed by the end of December Percentage Ratio The highest percentage ratio applicable to the Proposals pursuant to paragraph 10.02(g) Chapter 10 of the Listing Requirements is 10.89% Documents available for inspection The SSA is available for inspection at the registered office of GOB at No. 1, Jalan Putra Permai 1A, Taman Equine, Seri Kembangan, Selangor Darul Ehsan during normal office hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 22 December 2017 Page 7 of 7